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Investor Relations | CMD 2016
www.rolls-royce.com www.facebook.com/RollsRoyceGroup
@RollsRoyce
All figures are for Full Year 2015 unless otherwise stated.
Nuclear Presenters
5% 2015 Group Revenue
Population growth and improved living standards in emerging markets are driving a rise in demand for electricity Solid growth in mature markets based on current operations and plant life extensions
Business Focus
Market Dynamics
Growth in nuclear power generation is predominantly driven by non-OECD countries; strong growth is expected especially in China Within the future energy mix, low-carbon energy is expected to increase, with nuclear energy accounting for a significant share
Harry joined the company in 2011 as Director Global Government Relations following a distinguished career in the British Army. He has since held a number of senior roles in Rolls-Royce, including the Group’s Operations Strategy Director, President – Controls and Data Services and Strategy Director for the Aerospace Division. Today Harry is accountable for the Nuclear business across both Civil and Defence markets.
Harry Holt President – Nuclear
Rick joined Rolls-Royce in 2001 as CFO of the Marine business. Prior to joining he was Group Financial Controller of AWA plc – a paper company which was FTSE 100 for several years. Since 2009 Rick has held the positon of CFO for the Nuclear business. He is a CIMA fellow and a Sloan Fellow of the London Business School.
Rick Curtis EVP Finance – Nuclear
David joined the company as a professional engineer in 1985, having served a Marine Engineer Cadetship with Shell. He also has a degree and post grad in Nuclear Engineering. Currently David is Director, Future Programmes and Technology for the Nuclear Business. He has previously held several positions in the Nuclear sector and the Submarines business in particular.
David Orr Director, Future Programmes and Technology – Nuclear
Chrissie joined Rolls-Royce in 2009 as a leadership graduate and has worked in Civil, Defence and Marine. In 2016, Chrissie assumed responsibility for ‘digitally’ enabling Nuclear, to ultimately underpin a strategic transformation of the Nuclear services business, supporting Customers and identifying new areas for growth.
Chrissie Kemp Digital Partner - Nuclear
Submarine Nuclear Propulsion • World-leader in nuclear submarine systems and support services incorporating design,
procurement and operation • Responsible for powering the whole of the UK's Royal Navy submarine fleet
Underlying Revenue
2015 Group Revenue
H1 2016 Figure
Employees Historic Revenue & Profit
4,100* Order Book
£2.0bn
5%
Services OE
37% 63%
Submarines
Civil Nuclear/Other
80%
20%
£0.7bn
LTSA* 30%
T&M 33%
OE 37%
£684m £687m
£50m £70m
2014 2015**
**Includes £19m R&D credit
New Build For more than 40 years we have designed, engineered, manufactured and supplied custom equipment for both new build projects and operations reactors around the world
Instrumentation & Control World leading provider of nuclear instrumentation and controls, helping customers to improve the safety, availability and reliability of their operational plant while at the same time reducing costs
Nuclear Services Comprehensive suite of nuclear services and innovative fleet solutions that support critical investment projects and meet customer demands for plant availability, predictability, long-term operation and improvement of existing plant
£m
2014
Underlying Change
Acquisitions & Disposals
Exchange
2015
Order book 2,499 (331) - - 2,168 Underlying revenue 638 56 - (7) 687
Change +9% - -1% +8% Underlying OE revenue 230 27 - (6) 251
Change +12% - -3% +9% Underlying services revenue 408 29 - (1) 436
Change +7% - -0% +7% Underlying gross margin 119 (6) - (2) 111 Gross Margin % 18.7% -240bps 16.2%
Commercial and administrative costs (61) 6 - 2 (53) Restructuring costs (1) (1) - - (2) Research and development costs (7) 21 - - 14
Underlying profit before financing 50 20 - - 70
Change +40% +40%
Underlying operating margin 7.8% +230bps 10.2%
All figures are for Full Year 2015 unless otherwise stated.
This newsletter is for informational purposes only, it is not intended to contain any new material or non-public information relating to Rolls-Royce plc but is a summary of recent public announcements and as such may not be relied on. Nothing in this document should be construed as a profit forecast, however it may repeat certain statements that might be deemed to be forward-looking; such statements are made under the provisions of Rolls-Royce’s Safe Harbour Statement which can be found as part of our presentation materials on Rolls-Royce’s website http://www.rolls-royce.com/investors/results-centre
*FY15 Average
Revenue Breakdown
*Long Term Service Agreement
Nuclear – Engineering Excellence • Defence capability is unique, providing
strategic relevance, stable business model and bedrock for growth in civil nuclear
• Civil Nuclear market is substantial, resilient and growing across all phases of the nuclear lifecycle
• Well positioned to exploit growth in new build, modernisation and in-service markets
• Further optionality for growth
Civil market opportunities
Submarines – strategic national capability
Submarine reactor plant emits a similar noise profile as a car engine at idle
25 years operation without needing to be refuelled
1000x more power dense than a civil nuclear plant, operating in a hazardous environment
RN’s nuclear submarines have travelled over 18 million miles on Rolls-Royce nuclear power
A Trafalgar class submarine can circumnavigate the world on the energy released from 5g of uranium
• Slow down in western new build
• Current plants to run longer and more efficiently
• China and Russia dominate domestic new build and export
• Emerging SMR market
Note: RRPS sell UDGs into Russia. Note: RRPS sell UDGs into Russia.
Number of reactors in operation as of Q2 2015, large reactors only
Number of reactors to be built by 2030
In-service support
Upgrades including PLEX
New Build
Our capability accesses ~£1.4bn per reactor over the lifecycle
Across entire lifecycle New build • Up to 8 new sites identified for
potential build in next ~25 years • Rolls-Royce focused on safety
critical systems and equipment
Modernisation / upgrades • Provision of a complete range of
safety-critical I&C solutions • Efficient plant life extensions
(PLEX) for all key reactor technologies
Reactor Protection System
Reactor limitation system
Trip processing Emergency shutdown
safety action Diesel sequencing
system
Rod Control System Rod position indication system Rod position sensors
Pressuriser heat controller Safety valve control system
Turbine bypass control system
Boron meter In-core instrumentation system
Neutron Instrumentation System Ex-core Neutron Detectors
Reactivity meter
Pressure Transmitters Temperature
probes
Plant Monitoring
System Plant process
computer
hutdownty actionuencingsystem
Turbine bypasscontrol system
Circles represent market size
PWR3 has 30% fewer parts than PWR2 to reduce through-life cost
Engineering bill of material for PWR3 is around 86,000 lines: ~4x the engineering complexity of a large TRENT engine
PWR3 has a new design of reactor core, new designs for all major components, new materials and manufacturing techniques
Unique role as Technical Authority for full life-cycle, from design to de-commissioning
In-service support • Reposition from niche supplier to
trusted asset management partner • Leveraging current expertise
and footprint • Enhanced digital/data analytics Intelligent operations • Plant health monitoring • Plant performance optimisation • Planned outage management • Unplanned ‘SCRAM’ outage management
Intelligent maintenance • Inventory management • Obsolescence management • Equipment reliability improvement • Field service optimisation • Condition-based maintenance
per reactor over the lifecycle
Upgrades including PLEX £260m (includes I&C & EDGs)